Divorce causes personal stress on multiple many levels, with shattered dreams, personal bitterness and innocent children caught in the crossfire. But beyond the personal pain and distress of separation is the negative financial impacts of divorce that can last long after the final divorce decree is signed. It is so important to prepare in advance if you can and the impacts below explain why preparation is key.
Five Common Financial Impacts of Divorce
- Duplicated household expenses. The simple logistics of the divorcing couple require doubled household expenses. While once there was a single family home there are now two homes, each with its own rent or mortgage payment, utilities, and upkeep.
- Expanded child care needs. Something as simple as arranging child care and getting to work can become a challenge for parents learning how to co-parent from different residences. Previously shared child care duties may fall to one parent, or can be highly disorganized at first.
- Division of assets. With all divorce proceedings come the essential division of assets. Unless both parties have been regularly mutually involved in the daily financial decisions, one of you may realize you do not know or understand what you have in your marital estate. Information is key! You’ll need to understand your monthly expenses and savings plans, have access to all bank and investment accounts, and retain copies of tax records. Real assets, such as the family home, may have to be sold in order to share the equity.
- Credit score changes. It is wise to have a current copy of your credit report, and check it regularly for discrepancies. Also be on the look out for post-divorce charges, or new lines of credit, made by your spouse, that you may be held accountable for.
- Future finances. Don’t forget to include retirement plans in your divorce proceedings. Because retirement accounts are often some of the largest assets a couple holds, they can become hotly contested items during divorce.
The financial problems associated with divorce are often a carryover of financial problems during the marriage may escalate during the divorce period. And, if spouses are able to communicate amicably, mediation may be the best course for everyone, saving thousands of dollars and a lot of wear and tear on the remaining relationship.
With careful attention, divorce doesn’t have to end up financially debilitating to you years after its over. At McMurdie Law & Mediation, our goal is to help you separate from your partner in a way that allows you both to move on with your lives.